External influences on Business
P - political
E - environmental
S - social
T - technological
E - economical
C - competition
Business constraints
Limiting factors / reasons
why businesses can not
do what they would like to
EXTERNAL
Economical
Environmental
Competitors
Political
INTERNAL
Company’s Aims &
Objectives
Expertise
available
Money available
Technological
Social
However
Think... Not all external factors are
‘constraining’.
We are going to look at 6 different external
factors, for each you need to think if the factors
are beneficial to businesses or constraining to
businesses, or both?
P
Political
P
Local Gov.
Housing
Local
Tax
Education
services
Public
transport
/ Parking
P
Central Gov. Monetary Policy
P
Central Gov. Fiscal Policy
P European Gov. European Union
E
Economical
Performance of the economy affects the success of the
business. Consider:
•Exchange rates (will determine where the products are
sold)
•A poor performing economy will inhibit sales
•The strength of the economy will determine the rate
of growth possible for a business
S
Social
The current trends and tastes of the customer
Ethics –
consumer’s priorities
for business ethics
Clothing
- what styles of clothing
is popular
Food
- What types of food
is popular
T
Technological
LO: Explain the advantages & disadvantages of
technological change.
T
Technological
How can Technology affect business?
New machines =
production more efficient
Reduction in costs =
usually cheaper (less
workers needed)
New products =
(innovation encourages
spending)
World wide market =
(internet)
VW
http://www.youtube.com/watch?v=46_rhAzJzo4&feature=related
T
Technological
What are the advantages and disadvantages of new
technology being introduced in car manufacturing?
VW
http://www.youtube.com/watch?v=46_rhAzJzo4&feature=related
Honda assembly
http://www.youtube.com/watch?v=nvZBtJ-ncEM&feature=related
Exam style Q
Analyse how technological change would affect a
large food shop.
[8 marks]
Structure:
1. What is technological change. Technological change is...
2. What advantages would it bring (explain why it is an
advantage)
3. However what disadvantages would it bring (explain why
it is a disadvantage)
4. Overall, do YOU think technology has benefited the food
shop?
What have we learnt?
Discuss with a
partner before you
share it with the class
E
Environmental
Corporate Social Responsibility –
The business considers and acts upon the thoughts
of stakeholders other than their shareholders.
UK law states that a business must try to make a
profit for its shareholders.
I know my factory pollutes the environment,
but it is expensive to use a cleaner method
of production. W e are making a large profit,
and that's what are shareholders want
We invest a lot of money into cleaner
methods of production to help protect the
environment, customers prefer a company
that are aware of their CSR, which in turn
boosts are profits.
E
Environmental
Read page 83 –
Q. Explain the three external constraints that
discourage businesses from polluting. [6marks]
http://classtools.net/education-gamesphp/timer/
C
Competition
Nearly all businesses have competitors, which will
undoubtedly affect the way the business is ran
Cost-Benefit analysis
A ‘cost-benefit analysis is made by the
government to help them decide whether or not
to build / expand
External costs – these are disadvantages felt by
the community
External benefits – the community gains in some
way from the business activity.
Cost-Benefit analysis
Cost-Benefit analysis
Cost-Benefit analysis
Cost-Benefit analysis